The $100 Million Revenue Club: Mblox

(Editor’s note: This story is part of a series of profiles that examine the venture-backed companies with at least $100 million in revenue, an oft-mentioned threshold used by investment bankers to determine whether a company is IPO ready. Read the first post in the series about Freightquote.com here.)

Andrew Dark spent his first year as chief executive of MBlox Inc. making the Sunnyvale, Calif., provider of wireless infrastructure services more efficient, guiding it to its first-ever profitable year in 2009.

Dark’s second year, however, is about growth. The company, which Dark said generated north of $110 million in revenue in 2009, may seek to raise an unspecified amount of additional capital in order to build itself up through acquisitions. And if that growth takes hold, then year three, or more specifically 2011, may be when MBlox looks at going public.

Such an event would be good news for venture investors, many of whom ended up as investors in MBlox when it acquired MobileSys Inc. in 2003. Most of those investors started backing MobileSys in 2000, meaning they’ve been investors for a decade. To date, MBlox has raised $75 million from such firms as Duff Ackerman and Goodrich, Norwest Venture Partners, Scale Venture Partners and Trident Venture Partners.

The fact that Motricity Inc., which like MBlox is involved in wireless billing, recently filed to go public, has not altered Dark’s thinking even though Motricity is in worse financial condition. Motricity had a net loss of $78 million on revenue of $103.2 million in 2008. During the first months of 2009, the company lost $10.8 million on revenue of $88.7 million. It has, unlike MBlox, never made a profit.

“My interest is maximize shareholder investment,” said Dark, who splits his time between the company’s Sunnyvale and London offices. “We have good strong growth and we’ll have more accelerated growth in 2011.”

Kate Mitchell, a general partner with Scale Venture Partners, concurs. “They are expanding their footprint geographically and they are expanding their product line. There is no rush to go public.”

Serving as the intermediary between businesses and mobile operators, MBlox manages the delivery of billing of mobile content and mobile services. The company first started focusing on providing secure billing for SMS, or text messages, but has expanded to mobile transactions, a business that, in general, has been surging over the past several years as people get more comfortable with using their phones to pay for products and services. The company has grown to such an extent that it has connections to more than 500 operators in more than 180 countries and is capable of delivering content to more than 2 billion people. As a result, the company bills itself as the world’s largest mobile transaction network.

The company is in a particularly strong spot as it handles transactions from people using all phones, whether it’s the iPhone, the Android-enabled phones or just a regular phone. MBlox, said Scale’s Mitchell, is at the”nexus” of the surge in people using their mobile devices to send and receive content securely.

Dark said that as the market has grown, the company is capturing “new strands of business”, such as blue chip enterprises.

Dark became involved with MBlox in somewhat unusual fashion as he sought to acquire the company while still CEO of DataCash Group Plc, a publicly traded processor of secure Internet payments. Dark thought MBlox was a phenomenal company that would be a good fit for DataCash. However as DataCash began exploring the idea, it realized that such a deal would be “difficult” and “detrimental” to DataCash, given its market value.

But Dark was hooked and early last year left DataCash to join MBlox, which he found in need of some belt tightening. The company, he says frankly, had been ”mismanaged” and “wasn’t as successful as it could be.” Among the moves he undertook in 2010 was moving the company’s London office to a less expensive locale and getting out from under some unprofitable contracts. The company also undertook an effort to move its technology to more secure data centers.

Feeling that the company needed cash to move forward, MBlox did a $6.8 million bridge loan with some of its investors last year. But Dark said that with the company’s fortunes improving and, in turn, its valuation, it’ll look to repay that loan and raise new capital to go after acquisitions in 2010 of companies that he describes as small, but with ”reasonable revenues.” Overall, the company is looking for 10% to 15% growth in 2010.

Scale’s Mitchell said the firm and other backers are comfortable having MBlox get bigger.

Comments (1 of 1)

when techno savvy companies are first intorduceded to the public -its only the first people who hear about it , welcome it when thhat ey know what it is about . otherwise it'll remain stable . thats not a bad thing . but people don't know what to do when people but stock and bonds and when it drops down .

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